An assessment of photochemical carbon dioxide utilisation technologies using real options

Nascent carbon capture and utilisation technologies that transform captured ${\mathrm{CO}}_2$ emissions into a usable chemical product, provide alternatives to carbon capture and storage. Technology risk, and associated investment uncertainty, are barriers to the development of such technologies. In view of this, we consider a flexible real options framework to assess the technology risk inherent in photochemical carbon dioxide reduction technologies, a low readiness level technology (TRL 2–4) that utilises an artificial photosynthesis system based on natural or artificial light. We consider two competing configurations, both of which produce carbon monoxide but differ in the light source for the artificial photosynthesis system. One configuration uses intense UV lamps, while the other uses ambient light with a solar concentrator. After establishing literature informed cost estimates for pilot plant specifications, we conduct a sensitivity analysis across select physical attributes, technological development characteristics and price exposures. We confirm high sensitivity to the efficiency of the CO production process. Cost sensitivities are also evidenced for the catalyst, the running of the UV lamps in the first configuration and the solar concentrator in the second configuration. Price sensitivity is highest for the CO produced. Our study is relevant for project developers considering investment in research for this nascent technology.